Objective: To investigate non-point-of-sale cigarette marketing in Australia, one of the “darkest” markets in the world.
Design: Analysis of 172 tobacco industry documents.
Results: The tobacco industry has continued to market their products despite severe restrictions on legal marketing activity. They made careful plans to circumvent regulation well in advance. In preparation for bans, they chose and strengthened existing brands to enable their continued success in a dark market and prepared the consumer for bans by increasing their spending on below the line activities. Bans reduced the industry’s effectiveness and efficiency. After bans new brand launches stopped: instead key existing brands were strengthened via alterations to the product, line extensions, and stretching loopholes in the legislation as far as possible. In line with the general trend towards integrated marketing, a range of activities have been used in combination, including guerrilla marketing, advertising in imported international magazines, altering the pack, sponsorships, brand stretching, event promotions, lifestyle premiums, and the development of corporate websites.
Conclusions: The tobacco industry acknowledges that marketing restrictions have an impact, validating their continued use in tobacco control. The industry is extremely creative in circumventing these marketing restrictions, requiring tobacco marketing regulations to be informed by marketing expertise, regularly updated, and to adopt the broadest possible scope. Tobacco control advocates, particularly those communicating with young people, could learn from the creativity of the tobacco industry.
- tobacco industry
- ATL, “above-the- line”
- BTL, “below-the-line”
- OOH, out-of-home
- PML, Philip Morris (Australia) Limited
- POS, point-of sale
- TAP Act, Tobacco Advertising Prohibition Act
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- ATL, “above-the- line”
- BTL, “below-the-line”
- OOH, out-of-home
- PML, Philip Morris (Australia) Limited
- POS, point-of sale
- TAP Act, Tobacco Advertising Prohibition Act
This paper discusses the marketing strategies, other than point-of-sale (POS) marketing, used by the tobacco industry in Australia. The retail environment is extremely important in Australia’s dark market, and is neglected here only because it is the focus of another paper in this supplement.1 A third relevant paper in this supplement discusses the three brand categories operating in Australia—premium, mainstream, and supervalue.2 The significance of the cigarette pack as a marketing tool has already been explored in the literature.3,4
Australia is a highly restricted marketing environment for tobacco—what the tobacco industry refers to as a “dark market”. Federal Australian law has made most forms of tobacco marketing illegal, starting in 1976 and reaching a watershed in the (Federal) Tobacco Advertising Prohibition (TAP) Act 1992.5 On a background of existing television, radio and cinema bans, the TAP Act prohibited print advertising, domestic sponsorships and out-of-home (OOH), with some notable exceptions, particularly “internationally significant” sponsorships, which cease in 2006.
Good marketing integrates above-the-line and below-the-line strategies
There are two kinds of marketing strategies that can be used to promote any product: “above-the-line” (ATL, essentially advertising in the mass media) and “below-the-line” (BTL). These category names reflect the business practices of advertising agencies. Agencies generally make commission on placement of advertisements in newspapers, magazines and cinema, and on television, radio and billboards,6 a fee that appears “above the line” on their bill.7 Traditionally, other forms of promotion—events, POS displays, direct marketing, email promotions, text message promotions, premiums, price reductions, public relations activities, sponsorship, trade shows, exhibitions, sales literature and catalogues—were charged at a fixed fee and thus appeared “below the line”.6–12
Traditionally ATL and BTL strategies have been considered distinct, and BTL the poor cousin. In fact, some agencies have argued that BTL cheapens a brand and undermines long term brand prospects.6 However, increasingly, BTL strategies are recognised as economical, unique, and personal ways to achieve “cut-through” in the supersaturated advertising environment. Some marketing theorists and practitioners now argue that ATL is relatively unsophisticated and poor value, particularly for young, cynical, media-savvy markets. The key to powerful marketing, and standard marketing practice, is now the “integration” of a range of complementary ATL and/or BTL strategies to provide multifaceted support for a brand.6,13,14
The tobacco industry: a special kind of integrated marketing
This general shift in marketing away from the presumed superiority of ATL and towards integration and the power of BTL has special significance for the tobacco industry. Australian tobacco marketers are expert at integrated and BTL marketing. However, as they acknowledge, they have developed these skills not to keep up with other industries, but because the Australian tobacco market is among the darkest in the world.15,16 Because of progressive regulation, the Australian cigarette industry has been forced into dependence on creative BTL strategies alone to formulate an integrated marketing mix.
The new BTL: guerrilla marketing
Since the late 1990s, for all kinds of products but particularly those for youth markets, BTL has included “buzz”, “viral” or “guerrilla” marketing, which is intended to create a word-of-mouth “buzz” and thus spread like a “virus”. It is characterised by subversion of the transparency of commercial messages to make a consumer think that they are discovering something for themselves (thus “guerrilla”)—a phenomenon which is also central to coercions such as pyramid selling and cult recruitment.17 Guerrilla marketers may, for example, pay teens to talk to their friends about a product, commission footpath graffiti, or create an event or a website which, rather than containing overt brand imagery, is consistent with the image of the product and “coincidentally” contains it, without overtly delivering a selling message.
Guerrilla event marketing for tobacco is well developed and documented in Australia. There are many examples. A leading fashion designers’ after-show-party, bankrolled by a cigarette manufacturer, featured cigarette-bearing models.18 A 1950s themed room in a club was visited, with much fanfare, by young models who stacked a strategically placed retro refrigerator with cigarettes.* A dance party featuring a wide range of “feminine” products, including cigarettes, was promoted via the street press and followed up with questionnaires to partygoers about their smoking. Philip Morris (Australia) Limited (PML) has pleaded guilty to the charge that the latter event was cigarette advertising.19,20 Importantly, the people attending these events did not expect cigarettes to be featured, and in some instances co-sponsors claimed not to know that tobacco money was involved.
Data came from primary and secondary document sites on the world wide web arising from litigation in the USA.21 Documents came from the primary sites of the manufacturers,22 the Council for Tobacco Research,23 and the US Tobacco Institute24 and the secondary sites of Tobacco Documents Online (Bliley, BC, Health Canada and Guildford Miscellaneous collections),25 the Canadian Council for Tobacco Control site,26 the British Columbia Ministry of Health Services site,27 and the Center for Disease Control and Prevention Guildford site.28 The search string (pagewood or moorabbin or granville or australia or sydney or melbourne or brisbane or hobart or adelaide or perth or canberra or amatil or wills) has been used throughout the project to gather documents relating to the Australian market. Six hundred and ninety two of these were relevant to cigarette branding in Australia, and of these 172 dealt specifically with issues of transportability of brands and the importance of retailers. This paper presents only a subset of the evidence: all 172 documents are available from http://tobacco.health.usyd.edu.au/site/gateway/docs/search.htm. An overview of our approach to document searching and analysis is available elsewhere.29 The three main trade journals—Australian Retail Tobacconist, Retail World, and Australian Service Station and Convenience Store News (pre November 2001)/Australian Convenience Store News (post November 2001) were also searched by hand (volumes from 1990 to the present) for information on the industry’s marketing strategies.
Resilience, substance, transportability: keys to a dark market cigarette brand
In 1990, before the introduction of the TAP Act, PML launched a new (unsuccessful) brand, Belmont, to compete with Rothmans’ Winfield, and “to ensure a balanced aggressive portfolio entering the print ban era”.30 Belmont’s launch plan was classic integrated marketing, combining OOH, press inserts, POS, distribution, aggressive direct marketing by mail to Winfield smokers, and premiums in convenience retail outlets as incentives for both retailers and customers. Thirty hostesses in hotels and clubs offered samples and trade-ups (a free pack of Belmont cigarettes for smokers in exchange for the pack of competitor brand being smoked), playing “a critical role within the tactical mix in gaining trial amongst targeted opposition smokers, building awareness and creating word of mouth communication”.30
Glossary of terms
Above the line (ATL): marketing via the mass media (print, television, radio, posters/billboards and cinema)
Below the line (BTL): marketing via methods other than mass media
Brand stretching: promoting a cigarette brand via the marketing of non-tobacco products under the same brand
Cut-through: getting noticed by the consumer above the “noise” of the crowded marketing environment
Dark market: highly restricted marketing environment
Guerilla, buzz or viral marketing: marketing which appears not to be an advertisement, but rather creates an environment (for example, street graffiti, parties, websites, conversations with peers) consistent with a brand’s identity, in which the brand “coincidentally” appears
Out-of-home (OOH): billboards, or outdoor advertising
Point of sale marketing (POS): the arrangement of product and placement of promotional material in retail stores
Premiums: gifts, usually with purchase (for example, buy two packs, get a free lighter)
Text message promotions: promotions via text-message (SMS) on mobile (cellular) phones, a very popular form of communication in Australia, particularly among young people
In 2003, 11 years after the introduction of the TAP Act, marketing, in an evolved form, retains its central place. Indeed readers of British American Tobacco Australia’s 2000 annual report could be forgiven for thinking the TAP Act was never passed. A typical sample: “Dunhill’s presence as the leading super-premium brand was enhanced by a new and confident creative campaign in mid-June. This combined with a focus on building the brand’s presence in bars and cafes saw Dunhill achieve market share growth nationally...[consumer research showed]...increased consumer presence and relevance.”31 BATA’s report consistently attributed improvements in brand share to integrated marketing activities, including the launch of product innovations such as “King Size” cigarettes, small and soft packs, and “new creative campaigns”. In other forums manufacturers have explicitly discussed the value of their guerrilla marketing.32
As early as the 1970s, manufacturers made careful plans to manage regulation by “establish[ing] unique images for leading brands and at the same time ensur[ing] that after above-the-line phase out, the advertising campaigns already built could be easily transferred to...other media”.33 Many Australian industry documents, both pre- and post-TAP, frankly discussed the need to maximise the impact of remaining advertising opportunities, develop “instantly recognisable” brands, continue to research innovative new promotion techniques, and gradually adjust advertising strategies to acclimatise consumers before regulation was enforced.34–37
Transportable old brands instead of new brands
The frequency of brand launches in Australia started to slow in the 1980s, due to frequent failure of new brands and competition pushing the price of brand launches to “astronomical levels”.32,38–40 However, since the TAP Act, launching new brands has been seen as frankly wasteful. As one retail industry writer noted: “the ever tightening legislation has...put paid to a constant parade of new brands—it’s difficult enough to promote existing “old favourites” without trying to launch something new without promotional opportunities... the companies have to be constantly creative with what they’ve got.”41
The loss of ATL was seen as a terrible blow. RJR complained in 1997 that “the brand awareness goals set for a new brand or line extension that Australia used to reach in three to four months via print, billboard and direct marketing now take them two to three years to achieve. New brands have been almost impossible to launch.”42 In preparation for this media desert, new brands were launched in the dying days of ATL in Australia in an attempt to create brand awareness before the market became darker,43,44 and RJR advocated this method in other markets in response to the Australian experience, recommending: “any propositions with merit should be launched while you still have full colour, OOH, print & direct marketing. The hell you put field sales through and the trade through will pale compared to the hell you face getting a new proposition to jell after the bans.”42
After the TAP Act, instead of launching new brands, manufacturers have enriched existing brand personalities and developed new variants within existing brand families, focusing on a small number of brands with pre-existing high awareness and strong campaigns where possible.45–47 The best example of this transportability is one of the best known Australian cigarette campaigns, fronted by actor Paul Hogan, an irreverent iconic Australian figure, in the 1970s. A series of bizarre mishaps, strange activities or unsolvable problems were tagged with Hogan’s reassuringly good-humoured suggestion “Anyhow*...have a Winfield.” Hogan was removed in 1980, but the format and slogan are still in use on pack outserts (cardboard wrappers placed around the pack) and in retail advertising 30 years later, helping to maintain Winfield in its number one position in the Australian market.
The Australian dark market strategy appears to have been as follows. Before the restrictions were introduced, big powerful brands were selected, studied, and strengthened to ensure continued potency after the bans. In the lead up to the ban, spending on BTL was increased to prepare the consumer for the changed environment.48 After the restrictions, novelty was introduced within brand families through broader variant ranges (particularly in the supervalue and mainstream product categories) and product changes. Novel offerings included round-cornered packs and American style soft-packs for premium cigarettes; more modest pack changes (largely in graphic design) for mainstream and value cigarettes; and a new emphasis on mid-range (6–8 mg) tar banding, Australia’s fastest growing tar segment. In addition, when 1999 taxation changes made it financially viable, brands which had traditionally only been available in large pack sizes diversified into small packs of 20 or 25.49,50
These offers provide flexibility and novelty for consumers within a known brand offer, and make marketing expenditure more efficient for the manufacturer as the existing brand personality provides infrastructural support for the new offering. Loopholes in the legislation are also sought to continue brand images in the mind of the consumer by any available below-the-line means. Loopholes are extended as far as possible, denying the spirit of the law and sometimes complying with the letter only when forced,51 as Rothmans’ head office noted regarding Australian POS advertising in 1997: “local tobacco companies tend to stretch meaning of regulations and only removed [advertising] after retail warning was issued.”42 Cementing and sustaining a continuing personal relationship between the consumer and their brand is the priority. As PML argued in 1990: “going out and directly contacting our key target consumer is becoming increasingly more important, particularly in light of the upcoming media ban... we must now talk to the consumer face to face...”48
BTL (and ATL) activities after the TAP Act
After the restrictions were introduced, the manufacturers discussed a wide range of channels available to communicate with their consumers and promote their priority brands. In addition to the guerrilla marketing already discussed, these have included:
advertising in imported international magazines
altering the pack
the development of corporate websites.
Tobacco advertising is permitted in magazines that are both printed outside Australia and “not principally intended for distribution or use in Australia” and these have been targeted by the industry to gain a foothold.5,52–54
Delivering novelty via the pack
Manufacturers have printed on the inside of flip-top packs, printed on or changed the colour of the foil inside the pack, subtly changed pack design to provide novelty, and used pack and carton inserts and outserts—for example, to join two packs into a single “mini-carton” and display advertising imagery.†42,55–57 Because of the importance of the pack, the industry fears the introduction of generic packaging. However they admit that generic packaging is only “a short step” from the placement of products under the counter in retail stores, and is possibly “achievable [in Australia] in the long term”, particularly given the link to youth smoking.58
The TAP Act currently permits “sponsorships of international significance”, and the documents show that manufacturers see these sponsorships as vital to “consumer cut through”; select them for their brand synergy; and fund them both to market that brand via television and individual consumer attendance at the events and to provide opportunities to entertain VIPs.34,48,51,52,57,59–63
The importance of sponsorships is illustrated by an unusual exception to the “no new launches” rule: the recent launch of West by Imperial in Victoria, which houses the sponsorship exempted International Formula One competition. West was launched to coincide with the West/McLaren team winning the Victorian F1 in March 2003, underlining the synergistic power that the industry perceives international sponsorships to have in a dark market.
Although the manufacturers repeatedly deny that trademark diversification promotes tobacco products,64 their stated intentions to use brand stretching,52,63,65,66 and RJR’s statement that Australian manufacturers are “highly regretful that they did not move very early in the game to extend the reach of their trademarks well outside the tobacco category...for constant reinforcement of brand positioning”42 belies the claim.
Promotions, sampling, competitions, and sweepstakes via special theme nights at nightspots, pubs, and events and via mail and toll-free phone lines have been used,44,51,60,65,67,68 designed to “get our product into the hands of opposition smokers in an involving way”.48 “Sell no tell” hostesses in branded costumes at nightspots have also been used. Because these models sell the product but do not talk about it, they are supposedly not engaging in “advertising”.51
“Lifestyle” premiums such as diaries and entertainment guides were established as branded tools before TAP, and then continued after TAP in brand colours only, with the branding reinforced through POS displays.51,65,67
In March 2000, Eric Windholz, attorney with Philip Morris Corporate Services, wrote of PML’s new corporate website: “as you are no doubt aware, our ability to communicate about the Company and its positions through traditional media is severely restricted. As a result, the website takes an added significance [sic].”69
A case study: the resurrection of Peter Stuyvesant
Imperial Tobacco entered the Australian market in 1999 and shortly afterwards appointed an agency to manage more than $10m worth of BTL marketing activities.70 Peter Stuyvesant, an old and previously successful brand which sank into obscurity in the 1990s, is now being revived as Imperial’s key premium small-soft-pack product, providing a good illustration of re-branding and growth in the absence of ATL. Sizeable risks have been taken to extend the brand’s silver and blue retro styling, which is also reflected in the image based retail advertisements for the brand. Small silver and glass cabinets displaying only the Peter Stuyvesant soft pack range have been installed illegally in places such as cafes where cigarettes are not usually sold, minus the usual health warnings, allowing the brand a glamorous solo presence until detected by authorities.‡ Arresting photographic advertising images on carton sides have been used to provide eye catching in-store displays, and special brand-blue plastic display modules have been provided to sit over the regular pack dispensers, highlighting the brand within the display unit and providing clear pack face display (fig 1 –3).§
Imperial has obtained the “exclusive right to sell cigarettes” (not the right to “sponsor”) at popular music festivals, and the right has been exercised creatively with the assistance of Peer Group Media, a company specialising in youth marketing and headed by the editor of a local music magazine with impeccable street credibility. Imperial appear to be hoping for some memory of and resonance with the brand’s old slogan “your passport to international smoking pleasure”, which, if recalled, would offer camp retro irony for young Australians. Cigarettes have been sold by “air hostesses” in dedicated tents at festivals, along with clothes in suspiciously similar livery made by a separate company under a “Beaver Discovery World Air (DWA)” brand.71 One of these festival appearances was linked to similarly retro-chic club nights, also under the DWA brand, promoted as a follow up to the festival. Invitations included a fictional back story for the company (fig 4), and a URL which led to a single webpage. The page’s instruction “we’ll have something special real soon, but for now, go look at porn” was linked to ironically un-sexy websites on subjects such as fly fishing and barn dancing (fig 5). A silver metal Peter Stuyvesant cigarette case, branded and perfectly sized to contain a soft pack and thus cover the health warning, has also been made available at music festivals.¶
Australian Convenience Store News observed in 2002: “Peter Stuyvesant’s strength in the premium market is obscured in the aggregate market share data. Its share of the convenience store premium market increased from 11.6% to 13.2% last year... [it is] growing in the strongest segment, in particular the 20s pack size.”72 A review of AC Nielsen C*Track (convenience scanning) value share data from 2002 showed four Peter Stuyvesant products in the national top 40, and the total family ranked between sixth and 10th by state, with value shares from 2.0–6.6% of the state markets—no mean feat for a previously “uncool” brand.73 Given that young smokers are fond of convenience stores, premium brands, and small packs it seems highly likely, given the marketing strategies, that at least some of this share growth has come from young smokers.
There are three main conclusions to be drawn from this material. Firstly, the industry acknowledges that marketing restrictions have an impact, validating their continued use in tobacco control. Secondly, the industry is extremely creative in circumventing these marketing restrictions, requiring tobacco marketing regulations to be informed by marketing expertise, regularly updated, and to adopt the broadest possible scope. Thirdly, tobacco control advocates, particularly those communicating with young people, could learn from the creativity of the tobacco industry.
Some may argue that brand choice is inconsequential to tobacco control and that manufacturers’ ability to, in their words, “simply compete for brand share” is not the proper jurisdiction of tobacco control. However, this is belied by the enormous efforts expended by the industry on brand promotion, effectively an attempt to attract new smokers and keep existing smokers smoking. Brands and their transportability in a dark market are central concerns for the industry, and thus should be a central concern for tobacco control.
The industry clearly acknowledges that ATL advertising bans disrupt their business, making consumer awareness harder and more time consuming to achieve. However, even in a heavily restricted market, the cigarette industry keeps advertising. Despite the pain and reduced efficiency resulting from loss of ATL, BTL is stretched in innovative ways, and manufacturers breach the law until caught for short term benefits. Industry documents and observation suggest that the pack, POS, international sponsorships, and guerrilla marketing are the most important frontiers in a dark market. Advertising in imported international magazines, brand stretching, lifestyle premiums, and corporate websites also have a role to play.
The creativity of the industry in circumventing marketing restrictions highlights the need for truly comprehensive bans, addressing every aspect of all of these marketing activities. “Generic” packs, for example, would require complete standardisation: simply prohibiting current trademarks will not suffice. Inserts, outserts, foil, wrap, image, colour, typeface, printing on the cigarette rod, rod colour and tipping paper, and even scent would need to be considered (there is an Australian precedent for using scented foil for menthol cigarettes) as they are all means by which brand identity can be communicated. As discussed in other papers,2 a brand is far more than a visual trademark, and disruption of brand differentiation will require disruption of all aspects of brands, not just their name and logo.
Manufacturers prepare themselves and their consumers for onerous regulation years in advance, selecting, building, and transporting a strong set of existing brands into the regulated market. It follows that those contemplating regulation of tobacco marketing should closely guard proposals for marketing restrictions for as long as possible. Although this is inconsistent with usual due process, it could be argued that this industry has in fact relinquished its place at the negotiating table by deliberately and consistently flaunting the spirit of the law.
What this paper adds
Studies of cigarette marketing tend to focus on the effect of above-the-line strategies. There has been little published on the industry’s strategies after above-the-line has been banned.
This paper describes the industry’s overall strategy for dealing with the introduction of marketing restrictions, and the below-the-line marketing activities which have been integrated to promote cigarette brands after the introduction of bans.
In a dark market, the industry creates novelty for the consumer not by launching new brands, but by making new offers within existing strong brand families. This increases the efficiency and effectiveness of their marketing activities by removing the arduous task of attempting to launch a completely new brand concept without ATL. The provision of a vast array of variants within a brand family not only creates consumer novelty, but provides critical mass in the retail display; if only one pack of each variant can be displayed by law, eight variants provide twice the visual space of four, increasing brand impact. Regulation of marketing should, if possible, incorporate limits on the type and number of offers that can be made within a brand group, and the grounds on which products can be differentiated, with a particular eye for the truth of manufacturers’ product claims.
Australian cigarette manufacturers are not unique; they mirror trends in promotion of all kinds of products to young consumers worldwide, and tobacco control would benefit from studying other highly competitive youth markets (promoters of electronic/computer games and energy drinks seem particularly fond of guerrilla strategies, for example). Cutting edge, practising marketing experts could also be consulted on future directions and potential loopholes, and assist with the construction of both counter-marketing and legislation. As tobacco control is up against some of the most talented guerrilla marketing professionals in the world, it should, like them, avoid over-reliance on relatively static and expensive ATL strategies. Integrated marketing is likely to be more effective marketing, in tobacco control as much as any other endeavour.
The case study of the dark marketing of Peter Stuyvesant suggests some potential lessons for a tobacco control “brand”. Create a strong brand identity and communicate it clearly. Ensure that every aspect of the consumer’s experience of the brand is consistent with that identity. Integrate as many complementing marketing activities as possible to build your brand including BTL activities. Make your product stand out. Create a “world” for the product that the consumer will feel a part of, a world which complements the brand but is not necessarily “branded”. Use humour, and let the consumer know that you know that they “get the jokes”. Promote the brand in the consumers’ own environment, particularly where they have fun. It is worth noting that the phenomenally successful “Truth” campaign in Florida, which raised awareness, changed attitudes, and lowered smoking prevalence among teens, followed all of these principles.74–77
If comprehensive tobacco marketing regulation can be combined with cutting edge integrated marketing of tobacco control, it may be possible to counter the industry’s continuing efforts to attract and retain customers, even in a “dark” market.
Thanks to Simon Chapman and reviewers for helpful comments and Fiona Byrne for indispensable information management. The research reported in this paper was supported by grants from the National Health and Medical Research Council (2001–2003 #153857) and the US National Institutes of Health (2001–2005 # R01 CA87110–01A1).
↵* Personal communication from Fiona Cameron, freelance journalist, Melbourne, 19 July 2002.
↵† Personal observation, Winfield 25s, NSW, 2002
↵‡ Personal observation, NSW, 2002
↵§ Personal observation, NSW, 2002
↵¶ A picture of this case is available at http://www.ashaust.org.au/pdfs/StuyvTin02.pdf.